Demand Is Perfectly Inelastic When

question 6

Multiple Choice

Demand is perfectly inelastic when

• A)a good has perfect substitutes.
• B)an increase in supply does not change total revenue.
• C)a decrease in supply decreases total revenue.
• D)the price elasticity of demand is negative.
• E)an increase in supply does not change the equilibrium quantity.

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Definitions:

Elastic

Describes a situation in economics where the quantity demanded or supplied of a good changes significantly in response to a change in price.

Inelastic

Describes a situation where the demand or supply for a good or service is relatively unaffected when the price changes.

Elasticity of Demand

An indicator of the responsiveness of the quantity of a good demanded to its price alterations, showing how sensitive buyers are to changes in its cost.

Tax Burden

The total amount of taxes paid by individuals or businesses relative to their income, often discussed in the context of debates over fairness and economic policy.